jpod

5500 filing is required for the plan, or at least the medical reimbursement component, unless the number of participants is below the 100 threshold.

E: If there is no trust, there's no trust to tax, so there's no SOL period that would commence. If things go bad, the employer/holder of the insurance/annuity gets taxed, and the employer/holder will file its own 1120 or 1040 or whatever, and the filing of that tax return starts the relevant SOL period. While filing a Sch. P couldn't hurt, it can't possibly accomplish anything either.

I always thought that Schedule P was inapplicable (and meaningless) if there was no trust. If the plan is funded through an insurance or annuity contract, the potential income tax liability rests with the employer/holder.

Unless there has been a recent change I'm not familiar with, you were given incorrect information. See Code Section 125(f) and the parenthetical exclusion of Section 127 benefits.

Moira, from your post it appears that the employer is the same corporation; the owner merely shut down her practice for a while, and is now starting it up again. If those are the facts, and the corporation did not terminate the plan, then the plan still exists and is available for utilization as if nothing happened.

You don't need a "valid business reason." You can avoid the audit requirement even if your sole purpose/motivation is to avoid the audit requirement. As long as you end up with two "separate plans" within the meaning of the 414(l) regulations, you'll be ok, notwithstanding any IRS or DOL huffing and puffing to the contrary. Now, whether it is actually worth it dollar-wise is a different issue, but you wouldn't be asking the question if you didn't think it at least might be worth it.

No problem; done all the time. Sorry about earlier post.

I don't understand what the responders mean by the word "open" in the context of a welfare plan, but in any event DFVC requires that all past due 5500s be filed. Nevertheless, under the circumstances, I would take a shot at using DFVC and filing the 3 most recent 5500s with all required Schedules and explaining, in the cover letter, how difficult (if not impossible) it would be to secure the data required to prepare all 5500s and Schedules for prior years (especially Schedule A data). I like "3" better than "1" because it shows willingness to make a greater effort. By the way, I am assuming as MarZDoates stated that the plan was subject to the filing requirement for all years. However, given that there is no track record of previously-filed 5500s, is it possible to take the position in this case that there actually are multiple "plans" none of which ever crossed the 100-participant threshold? For example, if you offer 5 medical options, could each option be a single plan? This is highly fact sensitive, but depending upon the numbers it may be worth considering.

It may not be a pt if only the 401k account benefits from the lower fees resulting from aggregation. In other words, your non-401k account would pay the same level of fees it would pay without any aggregation, but all of the savings is realized by the 401k account. You might wish to check with your investment advisor to see if that can be done.

Whether an amount is "small" is in the eye of the beholder. If the employer is willing to take the risk that it may have to pay the amount again out if its own pocket (for example, to creditors of the decedent, or to one or more heirs if the brother isn't really the sole heir), then distribution to the brother with a release might be a reasonable approach. Otherwise, consult with legal counsel knowledgeable about estate administration in the decedent's state.

As is always the case, the documentation needs to be scrutinized, but it should provide the answer. However, all of this assumes that there was compliance with ERISA Section 204(h), if the MPP was a plan subject to Title I of ERISA. If there was no 204(h) compliance, you have bigger/different issues.

If you give us your reason for wishing to cancel your coverage we may be able to help you determine whether or not you have a "change in status" that would allow you to cancel.

Bravo card!! I have always wondered whether including non-employee directors in a top-hat NQDCP might knock you out of "top-hat" status. This seems dumb, but I wouldn't want to give an ERISA plaintiff's lawyer any ammunition to challenge the NQDCP's exemption from Parts 1-4 of Title I (particularly the vesting requirement).

The rule prohibiting reimbursement of outside insurance premiums only applies to FSAs covered by Section 125 of the Code.

If you say the plan was "frozen," we have to assume that a timely 204(h) notice was distributed, if the plan is subject to Title I of ERISA. Otherwise, the attempted freeze was ineffective.

Are the individuals who are in charge of your client sure that the employer is not a 501©(3)? It may be involved somehow with the Federal Gov't in implementing gov't programs, but maybe it is a separately incorporated entity that has 501©(3) status.

The GCM is just plain wrong. Some would say, however, that whether it is wrong or not, a taxpayer or employer should feel free to rely on the GCM if it is to its advantage to do so. I disagree.

Well then, that is a horse of a different color. I doubt that the sub could become non-profit and still be a "sub" of the parent. I think it's beyond the scope of this message board to speculate as to exactly how the total transaction would be structured, but ultimately the sub and the parent will be divorced and will no longer be members of a controlled group of corporations or a group of trades or businesses under common control. Also, I'll assume for the sake of argument that they won't be members of an affiliated service group either. The employees of both entities could continue to participate in the same plan, but then it would become a multiple employer plan, subject to the few special rules applicable to such plans, including separate ADP and ACP testing.

I cannot imagine any scenario in which a for-profit entity could be the "parent" to a tax-exempt entity. If you have such a scenario, please tell me more! Perhaps you stated it backwards; many tax-exempts have for-profit subsidiaries. In those cases, clearly they are members of a controlled group of corporations or trades or businesses under common control. I don't know of any legal reason why the two groups of employees could not participate in the same plan.

Kirk: You may be right about how the IRS may view it, but the IRS would be wrong. The "irrevocable election" concept in the regs. deals with unilateral actions by employees. Unless the employee was completely in control of the actions of the corporation, either as a majority shareholder or whatever, the actions of the duly constituted board of directors of the corporation should be respected and not deemed to be a unilateral revocation of the employee's election. The stated facts are that the two owners are 50-50 shareholders, and I guess I'm making the assumption that the shareholder in question is not the sole director of the corporation.

If this plan is not subject to the j&s requirements, but it has spousal consent by design, Section 205 of ERISA and all other authorities relating to the j&s rules are basically irrelevant.

Well then, since you're still inside the plan year, why can't you amend the plan to let the other owner back in the plan? I doubt that the "irrevocable election" requirement would be violated if the board of directors of the employer resolves to amend the plan to eliminate the irrevocable election option. I realize that the other owner probably won't get the same amount of up front cash he expected to get, but this is the only way you would avoid the 10% excise tax on nondeductible contributions.

Hold it a minute! If there is no j&s option, what does the plan say if there is no spousal consent? Do you hold the account until the participant reaches normal retirement age or dies, whichever comes first? I've been doing this type of work for more than a couple of days and I've never seen a plan like that.

1. Most likely there was no "mistake of fact" here, at least under the very narrow interpretation adopted by IRS. In a two-person-owner plan, you run a great risk of disqualification by relying on the mistake of fact theory under these facts. 2. Was the contribution made after the close of the plan year for which it was intended? If so, why can't you use the excess as an advance contribution for the year IN WHICH it was made?